Choosing new furniture is fun and at times, frustrating. In an ideal world with no limit on funds we should buy new furniture every time we move into a new home; items specifically designed to "fit" our space. But, lets face it that's not a reality. When we moved from a very open apartment to our "cottage" I found that most of our furniture was too large for our space; then when our sons were born we had to accommodate baby "stuff". This left us to pick and choose what would work and what wouldn't.
What we did:
Kept the sofa, replaced the coffee table and over-sized TV Cabinet. (I once saw an interview with Nate Berkus, he lived in his apt. in NYC for over a year before he found a sofa he loved!)
Home Rules: Transform the Place You Live Into a Place You'll Love
We didn't replace everything all at once, but rather one item at a time. Items we LOVED, we saved $ to buy and purchased quality furniture that would stand the abuse of two toddlers and two Labrador Retrievers.
If you live in Southern California I highly recommend shopping for furniture at Larry St. John's in Los Angeles. They have in-stock items and everything can be custom ordered for a fraction of the cost of PB, Crate and Barrel or Restoration Hardware or Ikea.
So, how to choose? Start by looking in magazines to see what styles you like, then, go to furniture stores and look at items in person. I find that most items are larger in person than they are in the catalogs. For example, a girlfriend of mine bought a new dining room set (from Pottery Barn) for her dining area, she too lives in a small cottage; which is not designed for over-sized furniture. When her table and chairs arrived she realized they were a bit larger than she anticipated and her buffet would leave the space over crowed. She ended up canceling the buffet, and is now on "the hunt" for something that will "work".
To avoid this problem, here is what I suggest. Look very carefully at the measurements and then use painters tape to mark off the areas where you are going to put the new furniture. You can also tape together pieces of newspaper and lay them out on the floor to give you a good feel for the space the items will take up. I find the newspaper taped together gives you the best "idea" for footprint the furniture will leave.
It's no secret I am a HUGE Pottery Barn Fan, I recommend the book below, I use it as a constant reference for organization solutions and decorating ideas. Although the book was published in 2005 it is still relevant for what we do today.